Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Las Vegas Sands Corp. (NYSE:LVS).
Las Vegas Sands Corp. (NYSE:LVS) shareholders have witnessed a decrease in hedge fund sentiment lately. LVS was in 37 hedge funds’ portfolios at the end of December. There were 42 hedge funds in our database with LVS holdings at the end of the previous quarter. Our calculations also showed that LVS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are tons of metrics market participants put to use to grade stocks. Two of the less utilized metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a significant amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to take a look at the key hedge fund action encompassing Las Vegas Sands Corp. (NYSE:LVS).
How are hedge funds trading Las Vegas Sands Corp. (NYSE:LVS)?
At Q4’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LVS over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Melvin Capital Management held the most valuable stake in Las Vegas Sands Corp. (NYSE:LVS), which was worth $370.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $178.4 million worth of shares. D1 Capital Partners, Citadel Investment Group, and Melvin Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cumberland Associates / Springowl Associates allocated the biggest weight to Las Vegas Sands Corp. (NYSE:LVS), around 5.58% of its 13F portfolio. Melvin Capital Management is also relatively very bullish on the stock, earmarking 3.04 percent of its 13F equity portfolio to LVS.
Because Las Vegas Sands Corp. (NYSE:LVS) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of hedge funds that slashed their full holdings in the third quarter. Interestingly, Israel Englander’s Millennium Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $264.6 million in stock, and John Khoury’s Long Pond Capital was right behind this move, as the fund cut about $77.4 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Las Vegas Sands Corp. (NYSE:LVS) but similarly valued. These stocks are America Movil SAB de CV (NYSE:AMX), Walgreens Boots Alliance Inc (NASDAQ:WBA), Air Products & Chemicals, Inc. (NYSE:APD), and Vodafone Group Plc (NASDAQ:VOD). This group of stocks’ market values resemble LVS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMX | 17 | 278371 | 6 |
| WBA | 38 | 693507 | 0 |
| APD | 54 | 736586 | 13 |
| VOD | 16 | 758597 | -4 |
| Average | 31.25 | 616765 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $617 million. That figure was $1256 million in LVS’s case. Air Products & Chemicals, Inc. (NYSE:APD) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 16 bullish hedge fund positions. Las Vegas Sands Corp. (NYSE:LVS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately LVS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LVS were disappointed as the stock returned -29.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
